Page 22 - Insurance Times February 2021

European nations perplexed as the most valuable of the lot or use of its physical and electronic data or software. Cyber
- DATA, was made vulnerable and the cyber theft has insurance policies can also provide coverage for liability, costs
resulted in hackers siphoning off money from the big and expenses arising from network intrusion, the spreading
corporate and left the database accessible to the hackers. of a virus or malicious code, computer theft or extortion.
This has raised the crime rate and a new type of war began
which we can term as Cyber War or Cyber terrorism. Here, Cyber insurance also provides cover for business interruption
the terrorist organizations with the use of high end and the cost of notifying customers and regulatory
technology and algorithms attack the confidential investigations or actions in case of a breach, without the
government database and extorts a hefty sum from the requirement for physical damage that is a standard trigger
nations for decrypting the same. under property policies. The Reserve Bank of India
highlighted the need for Indian Banks to obtain Cyber Crime
As the custodian of public's money, Banks needs to build on Insurance in its Internet Banking Guidelines of June 14, 2001
the CIA Triad (Confidentiality, Integrity, and Availability) to ensure that customers are spared from phishing liabilities.
.Here most important factor is to protect the customer data.
With millions of consumers transacting with banks online Cyber insurance policies are designed to address
every year, it is a bank's obligation to put mechanisms in many variables within the online realm and can
place to stop the loss of Personally Identifying Information include:
(PII), transactional data of its customers, and bank's internal The liability of the bank arising from data protection
sensitive information. It is also the bank's responsibility to laws
respond in an efficient and effective manner in case of such
losses. Cyber frauds are a fast emerging threat to most of The management of personal data and the
the business entities and more so to financial institutions, consequences of losing personal identifying information
including banks. Repair of banks' reputation Notification and monitoring
costs
Banks have been building suitable cyber defense systems to Cyber extortion and network interruption.
detect and prevent cyber-attacks and minimize, if not avoid,
financial losses. For the Bank, the most valuable assets are Cyber Insurance is a comprehensive insurance solution for
its customer. For a customer it is the trust factor that plays banks covering first-party costs and third-party liability risks
a significant role in building long term relationships with any arising from a cyber-event.
banking institution. So for the banks it becomes pertinent
to identify the risk involved with online cyber frauds and as
a matter of saving the institution from Reputational risk loss, First-party Coverage
adopt risk mitigation measures so that the banker- customer First-party covers provide protection to the bank in the event
relation remains intact. of a loss whether caused by itself or someone else. When a
bank experiences a cyber-attack or a data breach, the
Cyber Insurance - a Risk Transfer following events/occurrences can be covered under
insurance:
measure
Business losses can occur by two ways i.e., Naturally
occurring losses caused due to natural calamities, like fire ,
earthquake, floods etc. and the other human induced losses,
caused due to malafide intentions or by certain acts of thefts
be it physical theft or cyber theft . Though not natural, thefts
and robberies are also considered unavoidable. Banks find
ways of transferring the risk of loss due to such unavoidable
events through insurance. So to mitigate the risk it is
necessary to transfer the risk through cyber insurance.

Cyber insurance is a customized insurance offering
comprehensive cover for third party liability and first party
expenses a bank may incur arising out of unauthorized access
The Insurance Times, February 2021